For Sir Home Improvements' customers, making referrals pays. The company's rewards program awards points for each referral, and points can then be redeemed for prizes such as those shown above.
For Sir Home Improvements' customers, making referrals pays. The company's rewards program awards points for each referral, and points can then be redeemed for prizes such as those shown above.

Sir Home Improvements is holding its own in a challenging market, in part through a referral rewards program that has energized staff and customers. “In 2006, we had about a 35% increase in sales,” says Frank Mumford, president of the Schoolcraft, Mich., company. “In 2007, our sales were up 10%.” Net business generated by referrals was up 40%, a fact the owner attributes to the rewards program.

CUSTOMERS JOIN IN What started in May of 2006 as a Web-based program to boost installer referrals has blossomed into one that has increased activity from customers as well.

Under the program, the company awards points to people who make referrals, and the points can be redeemed for such prizes as cameras and telescopes. Participants get 2,500 points for registering online and two points for the dollar amount of every sale generated from their referral. For example, if a customer refers a friend who signs a $7,500 window-replacement contract, that customer gets 15,000 points.

“Referrals from our employees and subcontractors are up probably 60% to 70%,” Mumford says. “They're bringing in names all the time, and when we go to staff meetings, we talk about who's got the most points.”

The company has expanded the program to include previous clients, and even enlists its happiest customers to participate in sales appointments. Mumford asks those customers, whom he calls “elite referral partners,” if they're willing to receive a call from a sales rep when he's on an appointment. “While in a presentation, our salespeople will make a phone call to an elite referral partner, allowing a future customer to talk with an actual homeowner,” he says. “Elite referral partners are excited about that, and they'll take the phone calls.” Each call they participate in earns them 2,000 points, and if the job sells, they get additional points equal to the job value.

FAR FROM FULL POTENTIAL Though he hasn't yet totaled the cost of the referral rewards program, Mumford says it's minimal so far — the cost of the awards plus a small amount of one staffer's time to manage the program.

That may grow as Mumford discovers new ways to use it to drum up business. “I don't believe we've even scratched the surface of what this thing could do,” he says. “We know that about 20% of the population buys 80% of our product, so you want to keep hitting referrals. This is a great way to do that.”

—G.M. Filisko is a freelance writer based in Chicago.